Summary
This Form 8-K filing by Xcel Energy Inc. (XEL) on April 13, 2012, details a significant development regarding its subsidiary, Public Service Company of Colorado (PSCo). PSCo has reached an unopposed settlement agreement with its wholesale customers to implement an annual rate increase of $7.8 million, effective from April 11, 2012. This settlement is a revised figure from an initial filing in February 2011, which sought a larger annual increase of $16.1 million. The reduction in the requested rate increase is primarily attributed to a $5.8 million decrease in depreciation expense, linked to the early retirement of plants to comply with the Colorado Clean Air Clean Jobs Act (CACJA). While these CACJA compliance costs will be amortized over the original life of the affected plants, the immediate impact on the rate increase is less than originally projected. The settlement also reflects a lower authorized return on equity (ROE), now ranging between 10.1% and 10.4%, compared to the initial 10.9% target.
Key Highlights
- 1Public Service Company of Colorado (PSCo), a subsidiary of Xcel Energy, has reached an unopposed settlement agreement for an annual wholesale electric rate increase.
- 2The approved annual rate increase is $7.8 million, a reduction from the initially requested $16.1 million.
- 3The reduction in the rate increase is primarily due to a $5.8 million decrease in depreciation expense.
- 4The depreciation expense adjustment is associated with early plant retirements for compliance with the Colorado Clean Air Clean Jobs Act (CACJA).
- 5The settlement reflects a lower authorized return on equity (ROE) for PSCo, ranging from 10.1% to 10.4%, down from the initial 10.9% request.
- 6The settlement was filed with wholesale customers on April 11, 2012.
- 7PSCo had previously implemented an interim rate increase of $7.8 million in September 2011, subject to refund.